The Impact of Green Finance, Green Investment, and Green Innovation on the Financial Performance of Energy-Sector Companies

Abstract

Purpose: This study aims to examine the effect of green finance, green investment, and green innovation on financial performance, with firm age as a control variable, among energy sector companies listed on the Indonesia Stock Exchange for the period 2020–2024. Financial performance

is measured using Return on Assets (ROA).

Design/methodology/approach: The study employs a quantitative approach using secondary data sourced from annual reports, sustainability reports, and corporate financial statements. The sample was selected through purposive sampling, resulting in 19 companies with 95 observations over the five-year

observation period. The data were analyzed using panel data regression with the Random Effects (REM) model via EViews 12 software.

Findings: Results show that green finance has a positive and significant effect on financial performance, whereas green investment, green innovation, and firm age do not have a significant effect

when considered individually. However, these four variables collectively have a significant effect on financial performance.

Practical implications: The findings indicates that the financial benefits of sustainability strategies are

cumulative and only become apparent when various green initiatives are implemented in an integrated manner, rather than separately. This study implies that management at energy companies should prioritize the disclosure and implementation of green finance as the most responsive instrument in the short term, while continuing to develop green investment and green innovation as long-term sustainability strategies.

Originality/value: This study examines the effects of green finance, green investment, and green innovation on financial performance, with firm age as a control variable, in energy sector companies listed on the Indonesia Stock Exchange during the 2020–2024 period.

Paper type: empirical